Over the last 10 years Tesla CEO Elon Musk has been promising Wall Street that his electric car company would eventually make money.
Wednesday he finally made good on that promise. Shares closed up 9% Thursday after the company posted its best quarter ever the previous evening.
The big question now is whether the company can remain profitable.
Tesla’s strong report showed that overall manufacturing costs for each vehicle declined by 30%. The number hours it takes to build each car fell too.
That was enough for skeptical Tesla analyst Garrett Nelson to change his tune.
“The results look to be sustainable going forward,” the CFRA Research analyst said.
Nelson upgraded his recommendation on the stock after the earnings report. He said he is now confident that Telsa will be able to continue to reduce its costs.
Tesla’s (TSLA) stock had lost about a third of its value since hitting a record high of $385 a year ago.
The stock has been dogged by concerns that the company couldn’t hit production targets, was burning through too much cash and was facing looming debt payments.
Musk promised investors for months that the company would be profitable in the second half of 2018, but Wall Street had become very skeptical.
“We had our doubts,” Nelson said. “This is a company that has a long history of overpromising and under delivering.”
Tesla’s profitability comes just in the nick of time because $1.7 billion in debt is due by November of next year.